INCOME TAX ACT, 1961

Section 132(1)

Search and seizure - Validity - Reason to believe v. reason to suspect -

Search and seizure was conducted for the reason that Investigation Wing of the Income Tax department was in possession of credible information that assessee was in possession of jewellery which represented his undisclosed income or property.Assessee challenged validity thereof. Assessee filed instant writ petition, impugning action of search, inter alia, on the ground that it was contrary to the mandate of the Act as pre-conditions laid down in clauses (a) to (c) of section 132(1) had not been fulfilled. Held: On a perusal of satisfaction note as well as the counter affidavit on behalf of Income tax department, it was evident that sole ground for the action of search and seizure was that Investigation Wing was in possession of credible information assessee was in possession of jewellery which represented his undisclosed income or property. Apart from mere reproduction of said words, no cogent basis for arriving at this conclusion was discernible from the satisfaction note. The term 'reason to believe' cannot be interpreted and construed as 'reason to suspect'. The reason to suspect that assessee had undisclosed assets, and that there was likelihood that same would not be disclosed, did not amount to saying that there were reasons to believe that assesse was in possession of undisclosed assets, and intended to evade tax. It was the fundamental flaw in the search action initiated by revenue and thus entire exercise was vitiated and unlawful. Therefore, impugned search and seizure and ex post facto warrant of authorization under section 132 were to be quashed and all actions taken pursuant to such search and seizure were to be declared illegal.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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